Today Treasurer Jim Chalmers belled the cat about the deteriorating state of the economy.
Iron ore prices are sagging, which will worsen an already sizeable budget deficit this year.
Plus jobs growth isn’t what it once was, suggesting unemployment might rise, putting more pressure on the budget.
These realities are looming before you even consider the kick in the guts Donald Trump’s tariffs would be for the n economy.
Meanwhile, the Prime Minister made the comment the other day that the election will be in May.
Many commentators took that as a slip up and a clear marker that he’ll serve a full term, which means we’ll have a final Labor budget before polling day in April.
The government announced that it was bringing the budget forward recently when it issued next year’s parliamentary sitting calendar.
But in truth Labor is keeping its options open. By bringing the budget forward it can have a budget then an election.
Or it could rush to the polls in February or March and avoid having to hand down a final budget – one that would reflect the worsening economic conditions Jim Chalmers highlighted today. Including a massive deficit.
Quite obviously, if Labor thinks it can win by heading to the polls early and avoiding said budget, it might do so.
Especially if it knows there is no point waiting for interest rates to come down, now that the RBA has hinted that might not happen until the second half of next year.
Ultimately Albo will hold an election when he thinks he’s best placed to win it, whether that’s early or late.
While Chalmers was forced to concede he’s losing control of his budget numbers, that’s unlikely to reduce election pork barrelling.
Labor showed the other week it’s not above buying votes. The 20 percent reduction in HECS debts, costing $16b, was nothing short of a bribe. One designed to convince people to vote Labor.
The education minister Jason Clare sold the announcement as not impacting on the budget.
That’s true, but only because our budget process has become such a joke it is easy for Treasurer’s to hide expensive items from its bottom line.
HECS is considered ‘off budget’ as are a host of other expensive items.
The slug of an investment the NBN is off budget, as is the costly Snowy Hydro 2.0 scheme.
And you can bet that if Peter Dutton wins the next election and proceeds with his nuclear reactor policy, the cost of building them all will be off budget too. Billions more dollars spent in an unaccountable way.
All up, off budget items wherein governments try and ‘pick winners’ are now costing taxpayers around $20b annually according to economist Chris Richardson.
And that’s before you count the cost of things like the HECS debt write down.
Throw in the billions of dollars that now must go into paying the interest on our national debt – dead money before you even think about starting to pay the trillion dollars of debt back – and the reasons we are in economic trouble become all too apparent.
But the problems don’t stop there. Even within the confines of the budget it is likely that the forward projections underestimate rising costs of schemes such as the NDIS, and overestimate ‘s economic growth figures.
In other words, the deficit and accumulating debt may be even worse that it appears on face value.
And in the midst of all of this the government refuses to legislate the sort of big picture tax and transfer reforms we need and economists have long called for.